Replies to post #40736 on Flexpower Inc. (FLXP)

[kermit42]

There are market makers and other players who can trade in both markets. In fact, that's how the prices stay aligned--if they diverge, someone will buy in the cheaper market and sell in the more expensive market, thereby realigning the prices.

That's what people mean when they refer to "arbitrage." There are traders who do nothing but look for arbitrage opportunities--divergences in the markets that they can take advantage of.

[livinginstyle]

I'll take a stab at explaining how a stock trades on a foreign exchange:

If this trades like other companies do on foreign exchanges, they will be linked. I'm not exactly sure how it works but one exchange is an extension of the other. For example, if Microsoft closes up 50 cents to $30 here, it will open with a gap up in Europe of the equivalent of 50 cents. If bad news comes out and Microsoft closes down one Euro in Europe, then it will open premarket here down approx $1.30. I have seen this a lot of times. If you watch CNBC late night, or early morning like 3 or 4:AM, you will see some American companies trading overseas. Watch either the close or as close to it as you can and you will see what I'm talking about. The markets overseas are just an extension of trading in that equity. If it gets hot over there, it will open hot on our exchange. There is no split of the float or anything like that. It trades from the same float. Trading on a foreign exchange gives a stock more exposure to new share holders.